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S.F. No. 1918 - Energy Forward Pricing Mechanisms for Government Agencies Provisions Modifications
 
Author: Senator Roger C. Chamberlain
 
Prepared By: Stephanie James, Senate Counsel (651/296-0103)
 
Date: February 27, 2012



 

Section 1 [Energy Forward Pricing Mechanisms] expands the optional use of forward pricing mechanisms for energy.  Under current law, a forward pricing mechanism is a contract for purchase of a specified quantity of energy at a future date at a set price, and state agencies are authorized to enter into these contracts for up to 90 percent of their estimated energy use for a given period of time.  This bill expands the permissive authority entering into futures contracts for energy by: 

(1) allowing the use of this mechanism for options for contracts, as well as for contracts;

(2) adding to the list of entities authorized to enter into forward pricing mechanism contracts and options for contracts; and

(3) increasing the amount of energy that may be subject to a forward pricing mechanism from 90 percent to 100 percent  of estimated energy use for a given period.

More specifically, the following entities are added to the list of those authorized to enter into forward pricing mechanisms:  Minnesota State Colleges and Universities, the University of Minnesota, a statutory or home rule charter city, a county, a town, a school district, a regional agency, or another political subdivision.

Section 1 adds a requirement for an oversight process before a government agency can exercise their authority to use a forward pricing mechanism.

Section 2 repeals a section that authorized Hennepin County to enter into forward pricing mechanisms for energy contracts.  The repealed section is duplicative, in light of the change under section 1 authorizing all counties to use future pricing mechanisms for energy.

 
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